Reporter: Zheng Yuhang Intern reporter: Yue Chupeng Editor: Lan Suying
Image source: Photo by Xinhua News Agency reporter Liu Yanan
On October 1, local time, about 45,000 dock workers in 36 ports on the east coast and the Mexico Bay coast of United States went on strike due to the breakdown of negotiations on new labor contracts due to wage and other issues.
This is the first strike at a port on the East Coast of United States and the Gulf of Mexico in nearly 50 years. The 36 ports affected by the strike handle 57 percent of United States' international container traffic and 87 percent of United States trade (in tonnage), the data shows.
Industry insiders are concerned that a large-scale port strike will not only have a "devastating impact" on the United States economy, but may also trigger global supply chain turmoil. JPMorgan analysts estimate that the strike could cost the economy $5 billion a day, which is equivalent to about 6% of United States' daily gross domestic product.
Diana · Fuchtgort-Roth, former chief economist at the United States Department of Labor and former chief of staff of the President's Council of Economic Advisers, said in an interview with the Daily Economic News, "In the long run, the real risk is that foreign customers may permanently turn to other suppliers, because supply chain disruptions will cause them to find more stable partners." ”
In addition, domestic inflation in the United States may also accelerate again due to strikes, creating uncertainty about the Fed's path to rate cuts.
About 45,000 United States workers went on strike at 36 ports
Shortly after midnight local time on October 1, a group of dock workers began a protest at the port of Philadelphia, United States, walking in a circle at the railroad crossing outside the port, chanting: "No work without fair contracts." On the side of one of the trucks, the International Association of Longshoreworkers (ILA) also hung a message board that read, "Automation Hurts Families: ILA stands for Employment Protection."
This is just one side of the United States port strike. On the same day, 45,000 dock workers in 36 ports United States from Maine to Texas went on strike to demand wage increases and oppose the automation of port machinery and equipment. Affected ports include New York, Baltimore, and Houston, where more than three-quarters of imports of coffee, tea, beverages, and spirits, as well as large exports of fertilizers, automobiles, and medical/surgical instruments, are shipped through these ports on United States United States East Coast and Mexico Bay Coast, according to the National Association of Manufacturers (NAM).
This is the first shutdown at a port on the East Coast of United States and the Gulf of Mexico since 1977. Previously, labor negotiations between the ILA and the United States Maritime Union (USMX), a shipping industry organization representing terminal operators and ocean shipping companies, were at an impasse.
The USMX's proposal is to increase wages by nearly 50 percent over the proposed six-year contract period, surpassing all other recent union agreements, while tackling inflation. They complained that the unions were not negotiating in good faith: there had been no face-to-face talks between the two sides since June. And the ILA seeks an hourly wage increase of $5 per year for the six years of the next contract, with the maximum wage increasing from $39 to $69, which equates to a nearly 80 percent wage increase.
ILA President Harold · Daggett said in a statement on social media: "The reason for this strike is because USMX decided to insist that foreign shipping companies make billions of dollars in profits at United States ports without paying the United States dockworkers who bring them wealth." We are ready to fight until we need to, and no matter how long the strike takes, we will hold on and fight for the wages our union members deserve and protection from automation. "The ILA is not only demanding a significant increase in wages, but also advocating a total ban on the use of automated equipment such as automatic cranes, automatic doors, and container trucks for loading and unloading goods.
For now, the National Association of United States Manufacturers (NAM) is urging United States President Joe Biden to invoke the authority granted by the national security law to order workers to return to port as negotiations continue.
In this regard, Diana · Fuchtgort-Roth, former chief economist of the United States Department of Labor and former chief of staff of the President's Council of Economic Advisers, said in an interview with the Daily Economic News, "Port workers are under the jurisdiction of the National Labor Relations Board and are subject to the National Labor Relations Act." The Biden-Harris administration cannot set up a presidential emergency committee and call for mediation unless Congress re-enacts to classify port workers under the regulation of the Railroad Labor Act. ”
About half of the international shipping in the United States is "paralyzed", and the daily economic loss may reach $5 billion
According to the United States Conference Board, the 36 ports affected by the strike handle 57% of United States' international container traffic and 87% of merchandise trade (in tonnage terms). Global supply chains are expected to be impacted by increased freight congestion, imbalances between supply and demand of containers, and the inability of capacity to reach needed international ports.
87% of commodity trade (by tonnage) is transported through ports in the eastern United States and the Gulf of Mexico Image source: Conference Board report of the United States
Biden and Vice President Kamala · Harris are "monitoring the potential impact of supply chains and evaluating ways to respond to them," the White House said in a statement.
·Peter Sand, chief analyst of Xeneta, a shipping rate intelligence platform, said in an interview with foreign media that the strike would have a domino-like chain reaction on the global supply chain. The first direct impact is on the eastern United States and the Gulf Coast of Mexico. The strike will have a knock-on effect on ships currently queuing outside ports, delaying their next voyage to United States with new cargo.
As of October 1 local time, more than 38 container ships were waiting to anchor near United States ports, compared with only three last Sunday (September 29), according to data from supply chain risk analysis firm Everstream Analytics.
"We will see transport disruptions and some ships will be delayed leaving Europe and the Eastern Mediterranean by late October and early November, and from Asia in late December and early January," Sander said. This is basically the next normal small peak of container shipping, which is before the Chinese New Year. "Sander expects the strike to last a week.
Oxford Economics estimates that a week-long strike could reduce United States gross domestic product by $4.5 billion to $7.5 billion. JPMorgan analysts estimate that the strike could cost $5 billion a day, which is equivalent to about 6% of United States' daily gross domestic product. Even when shippers turn to West Coast ports, congestion can occur, leading to cargo delays and a significant increase in transportation costs.
Denmark shipping giant Maersk warned that a one-week shutdown could take four to six weeks to recover, "and backlogs and delays are increasing every day." Grace ·Zweimer, an economist at the University of Oxford, said in the report: "A strike of about two weeks could also disrupt supply chains until 2025." ”
"In the long term, the real risk is that foreign customers may permanently switch to other suppliers, as supply chain disruptions will cause them to look for more stable partners," Furchtgot-Ross told reporters. ”
For United States consumers and businesses, the prolonged strike could affect the transportation of bananas, manufacturing parts, plywood and raw materials such as cotton and copper, and fresh meat and other refrigerated foods could spoil, leading to shortages and price increases.
Furcht Gott-Ross explained to reporters that strikes raise prices, and the longer the strike lasts, the greater inflationary pressures. If the strike lasts for several weeks, prices will rise and retailers will have a hard time getting their hands on goods before Christmas. However, she said in an interview that she did not think the strike would last too long and that the government would end the trouble before the elections.
Adam Kamins, an economist ·at Moody's Analytics, said the food and automotive industries would face the most serious problems because they were particularly dependent on ports that were about to close. The ensuing re-acceleration of inflation could also create more uncertainty, forcing the Fed to be more cautious about cutting interest rates, which would weigh on the overall outlook for job growth and investment.
However, a spokesman for Wal-Mart, the largest retailer in United States, told the Daily Economic News that Wal-Mart is prepared for unforeseen disruptions in the supply chain and maintains additional sources of supply, and there will be no shortages in the short term.
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Do so at your own risk.
National Business Daily